How Swiss banking started and evolved in Geneva
Pictet is a Swiss banking founded in Geneva in 1805.
The origins of Swiss private banks
Charles Pictet de Rochemont (1755-1824) represented Geneva at the Congress of Vienna in 1814 and secured a territorial extension that linked Geneva – which until then was fragmented and isolated – with the rest of Switzerland.
Swiss private banks began to develop on a national scale from the 18th century onwards. At the time, Geneva was an independent republic that had gained prominence since the Reformation. Thanks to its central position in Europe, close business ties with France and vibrant economy, it became a fertile ground for the emergence of numerous private banks.
Formerly a city-state, Geneva joined the Swiss Confederation in 1815, largely thanks to the diplomatic pursuits of Charles Pictet de Rochemont. He represented Geneva at the Congress of Vienna in 1814 and secured a territorial extension that linked Geneva – which until then was fragmented and isolated – with the rest of Switzerland.
Switzerland’s banking industry
Switzerland’s banking industry as we know it today dates back to the 19th century and gradually took shape in tandem with the rising importance of the cantonal banks and, from 1850 onwards, the appearance of the major full-service banks. In Geneva, efforts to expand investment capabilities, particularly to finance manufacturing, led private banks to form alliances such as the Quatuor, Omnium and Union Financière.
Employees of the Swiss bank Ernest Pictet & Cie (1878-1909) This photo dates from 1880 and shows two partners plus two future partners: Ernest Pictet (1856-1909), seated, second from the right; behind him, Emile Pictet (1875-1909) with his hands on his shoulders; standing on the far right, Jacques Marion (1909-1930); and standing on the far left, Guillaume Pictet, Ernest’s son, who became a Partner in 1889 and remained so until 1926.
On a federal level, Ernest Pictet, a Partner of the bank (from 1856 to 1909) and member of the National Council (the Federal Assembly’s lower house), lobbied for the creation of a central bank. The Swiss National Bank was eventually founded in 1907. His son Guillaume, also a Partner (1889-1926), later sat on the SNB’s Bank Council from 1918 until he passed away.
As manufacturing flourished and entities such as public limited companies emerged, the need for capital markets became increasingly apparent, leading to the creation of stock exchanges in Switzerland. Securities trading began in Geneva in 1850, when the city was still the banking capital of Switzerland. This was followed by Basel (1876) and Zurich (1884). In 1993, these institutions joined forces to found the Swiss stock exchange, based in Zurich.
However, the growth of Switzerland’s major banks was brought to a standstill as the global crisis of the 1930s unfolded. In Geneva private banks such as Pictet, which specialised in wealth management, emerged from these turbulent times in a stronger position, becoming a cornerstone of Switzerland’s post-war finance industry.
Pictet traders on the floor of the Geneva Stock Exchange in 1980.
Swiss banks after the Second World War
The post-war period was a boom time for the financial services industry in Switzerland – and Geneva was no exception. Once Switzerland and the Allies had settled their dispute over the country’s wartime conduct, capital flowed back into Switzerland, attracted by its exceptional political stability, the strength of the Swiss franc and enhanced banking confidentiality following the passing of the Banking Act in 1934.
The Pictet Group began its institutional asset management operations in 1967.
During this period, Switzerland’s private banks modernised while preserving their traditional partnership-based workings. This was particularly evident in Geneva, where private banking held a more prominent position in the local economy than elsewhere in Switzerland. While partners from outside the founding families were increasingly brought in, the principle of partner-based ownership remained intact. Driven by the firm belief that a growing share of capital would soon be managed through collective savings, private banks began diversifying into new areas, with many expanding into institutional asset management. Pictet, for example, entered this field as early as 1967.
As globalisation emerged as a force, Swiss banks established an extensive network of subsidiaries around the world. At the same time, Switzerland saw an influx of foreign banks, and Geneva’s financial sector also evolved into a hub for commodity trading.
The Swiss financial services industry in the 21st century
From the 1990s and the ending of the Cold War, several countries began to adopt a different attitude towards Switzerland, increasingly challenging the legitimacy of its banking secrecy arrangements.
Under international pressure, Switzerland was forced to reopen the question of its wartime trading relations and the issue of dormant assets. It committed to the automatic exchange of information with OECD member states in the wake of the 2008 global financial crisis. Mirroring stories from around the world, the government had to step in to rescue one of its iconic banks. The Swiss financial services industry proved its strength by skilfully navigating and adapting to these profound changes. Despite rising pressure from rival financial hubs, it continues to hold its position as a global leader in financial services. To meet the needs of sophisticated clients, Swiss banks were able to diversify into areas such as responsible investing, hedge funds and private equity, plus adopt new technologies and successfully navigate the increasingly complex market landscape. These achievements place them in pole position to meet the challenges of the future.
Swiss banks have effectively expanded into new areas, for example offering an increasing number of responsible investment opportunities to clients seeking to diversify their portfolios.
Q&A
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What’s the difference between a full-service bank and a Swiss private bank?
Full-service banks offer a complete range of financial services to all types of client, from retail customers, to small businesses, to large companies. This includes current accounts and savings accounts, loans, and sometimes basic investment services and credit operations. In contrast, private banks in Switzerland focus on wealth management for an affluent client base, emphasising personalised advice and tailor-made solutions, diversified investment strategies, and the safeguarding and passing-on of wealth. Supplementary services are frequently offered to meet the specific requirements of wealthy individuals, including access to asset management solutions and investment funds.
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How did the services of Swiss banks become sought after?
Swiss banks have earned a global reputation over decades, underpinned by several advantages. Their long-standing tradition of excellence in wealth management and investment expertise are central to their appeal, but access to a stable, business-friendly economic and political environment also plays a key role. In addition, Swiss banks maintain a strong focus on innovation while taking a conservative approach to risk management that is free from conflicts of interest. Such efforts have reinforced financial strength and confidence from global investors. Together, these factors have enabled Swiss banks to distinguish themselves globally and build a strong reputation for meticulous attention to detail and high professional standards.
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Why are Swiss banks seen as stable?
The stability of Swiss banks rests on several key pillars. One is a stringent regulatory framework that enforces high standards in investment management and capital adequacy. Transparency in operations is also mandatory. As discussed above, Switzerland has a stable economic and political environment, with robust banks enhancing the security of investments. Risks are managed conservatively, asset diversification is actively pursued and market fluctuations are continuously monitored. Another reason Swiss banks are seen as stable is their long-standing culture of excellence centring on wealth preservation. These factors help uphold a reputation founded on reliability and prudent stewardship, even in times of global economic uncertainty.
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